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Midlantic Bank v. Wood

302 N.J. Super. 286, 695 A.2d 335 (App. Div. 1997)

UCC; SECURITY INTERESTS; LIENS—A perfected security interest is superior to a garage keeper’s lien for towing and storage charges. If the secured party gives notice to the garage holding an abandoned car, the fees are limited by statute and garage cannot recover excess charges, though reasonable.

A towing company appealed a judicial decision awarding it $1,320.00 in towing and storage expenses relating to an abandoned car in which a bank had a perfected security interest. The towing company sought payment of the full outstanding balance of $3,323.20. The bank contends its liability is limited by statute to $400.00.

The Appellate Division observed that a prior perfected security interest is unaffected by a subsequent lien, and held that the bank’s security interest is superior to the garage’s lien. While one entitled to reclaim possession of an abandoned automobile must pay reasonable costs of towing and storage, such a mandate does not supersede or alter the priority of a perfected security interest. There is also ample case law to support the principle that a perfected security interest has priority over a garage keeper’s lien, and the Court found no legislative intent to alter this principle. The sole issue remanded for trial was whether the bank had diligently notified the garage of its security interest. If not, the garage may recover the $1,320.00 it was initially awarded; if so, the garage will only be entitled to $400.00.


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